FRM trustee seeks another $330k in fees

Published: October 5, 2011

The trustee in the Financial Mortgage Resources Inc. bankruptcy has asked for nearly $330,000 in fees and expenses, which, if granted, would bring the reimbursement of his Nashua-based firm, Donchess & Notinger, to more than $1 million in the complex and controversial bankruptcy.The fees don't include trustee Steve Notinger's own fees as trustee, nor the fee and expenses of other attorneys retained by the FRM estate. Nor do they include a $200,000 holdback to the law firm, which it says it is owed from the work it has done to date.In the most recent filing -- the first fee application since February -- the firm claimed that it just takes time and money to sort out the "total mess" left behind by Scott Farah, president of FRM, and Donald Dodge, president of the loan servicing firm CL&M, after the two Meredith companies shut their doors in November 2009.State officials forced the companies into bankruptcy, and a federal jury convicted Farah and Dodge of the biggest Ponzi scheme in the state's history -- a scheme that bilked hundreds of victims out of millions of dollars.Most of the bankruptcy trustee's energy has been spent on going after the victims of the scheme -- hard-money lenders who had thought that that their investments were going to specific commercial loans backed by real property.But the law firm maintained since funds were commingled, the property that the lenders thought was collateral belonged to the estate.Many of the lenders argued that they were being victimized twice, that there is very little money to distribute, and that trustee is diminishing the estate by spending so much on his own law firm."Resistance" among the lenders (the trustee calls them investors) has "died down somewhat" - according to the filing -- as the firm managed to settle with particular lender, getting them to share in the sale of collateral or pay back some of the interest.The law firm will have managed to collect as much as $4 million by Oct. 17, the day the fee petition will be heard, but there are still many lenders who have relented, and the trustee is facing a two-year deadline to start litigation. That process has become more cumbersome by a recent court order requiring the trustee break up the omnibus litigation into numerous individual lawsuits.From February to September, Donchess & Notinger collected about $1 million, and expended 1,588 hours of work by both attorneys and paralegals at an average hourly wage of $253.96. -- BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW